BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 60 X1
                                                                  Page  1

          Date of Hearing:   March 21, 2001

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Carole Migden, Chairwoman

                 AB 60 X1 (Hertzberg) - As Amended:  March 19, 2001 

          Policy Committee:                              E.C.&A.Vote:17-0

          Urgency:     Yes                  State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          Requires that the California Energy Commission (CEC), as a  
          condition of powerplant certification, require the applicant to  
          offer to sell the plant's electricity-to an investor-owned  
          utility, a municipal utility, or the Department of Water  
          Resources-at contract terms at least as favorable as those  
          offered to another entity.  (This requirement would apply to any  
          applications pending with the CEC on the effective date of this  
          measure.)

           FISCAL EFFECT  

          Minor absorbable costs to the CEC to adopt rules and regulations  
          to implement and enforce the bill's requirements.

           COMMENTS  

           1)Purpose  .  This bill is intended to promote native generation  
            of electric power in California at the best available rates.   
            On some days as much as 15 percent of California's generating  
            capacity leaves the state in search of higher prices on the  
            western states' interconnected grid. However, 25 percent of  
            California's generating capacity comes from out of state  
            generation.  A "me-first" mindset is beginning to gain  
            momentum in other western states, and given that California is  
            a net importer of electricity, it may not be in the state's  
            best long-term interest to be too parochial with generation  
            supply.  

            This bill attempts to balance the need to add new generation  
            capacity into California's purchasing mix without discouraging  
            new powerplant applications by binding the sale of new  








                                                                  AB 60 X1
                                                                  Page  2

            capacity within California at lower rates than those available  
            from other parties.  Essentially this bill seeks to encourage  
            new generators to sell to California electrical corporations,  
            munis or the DWR, but in a manner consistent with market-based  
            pricing that does not reserve all generating capacity on a de  
            facto basis for California sources.

           2)Opposition  .  The Independent Energy Producers indicate the  
            bill would essentially require an applicant to execute a  
            contract for power sales as a condition to obtaining a permit.  
             The IEP objects to a requirement upfront "before the project  
            has proven itself to be operational and during a period where  
            market conditions will undoubtably change."

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081